The British government has recognised Scotch whisky as a ‘vital industry’ and frozen excise duty in its 2016 Budget.
The Scotch whisky industry has hailed the decision as a success for its Fair Tax for Whisky: Stand Up For Scotch campaign, led by the Scotch Whisky Association (SWA), although it claimed a cut would have provided ‘a bigger boost for consumers, a vital home-grown industry and public finances’.
The decision means excise duty on a standard 40% abv bottle of Scotch whisky will remain at £7.59 for another year.
The freeze follows last year’s decision by Chancellor George Osborne to reduce excise duty on spirits by 2%.
The freeze will also be applied to beer and cider, as well as whisky and other spirits, although Osborne said duty on wine and other alcoholic beverages will continue to increase with inflation.
He said: ‘Scotch whisky accounts for a fifth of all of the UK’s food and drinks exports. So we back Scotland and back that vital industry too with a freeze on whisky and other spirits duty this year; all other alcohol duties will rise by inflation as planned.’
The SWA had campaigned for another reduction in today’s Budget, claiming 85% of the British public agree the rate of tax on Scotch whisky is ‘too high’.
It also claimed that last year’s reduction contributed to a £102 million increase in revenue from spirits for the British Treasury.
David Frost, chief executive of the SWA, said: ‘We welcome the freeze in excise duty on spirits. We hope that this will sustain continued growth in the UK market for Scotch whisky and thus help improve the public finances. But tax [VAT and excise duty combined] is still 76% of the price of an average bottle of Scotch and the majority of the British public think that is unfairly high. We will continue to call for fairer taxation of Scotch, a vital UK industry, and we urge duty reductions in future years.’
The Scotch whisky industry employs over 40,000 people across the UK, and according to the SWA, without its success the UK’s trade deficit would be 11% larger.
The UK has one of the highest rates of excise duty on spirits within the EU (€10.50 duty on a 70cl bottle at 40% abv) – falling just behind Sweden (€15.27), Finland (€12.75) and Ireland (€11.91).